No GST on reimbursement of expenses incurred by employees on behalf of Company: AAR
[Alcon Consulting Engineers (India) (P.) Ltd., In re [2019] 110 taxmann.com 357 (AAR - Karnataka)]
The applicant is providing consultancy services for construction projects. While providing such services some of the expenses are incurred by their employees on behalf of the applicant. It has
sought an Advance Ruling to determine whether expenses incurred by staff on behalf of applicant and then reimbursed periodically are liable to GST?
The Authority for Advance Rulings observed that the amount paid by employees to the supplier of service is a 'consideration' as if it is paid by the applicant itself for services received by it. This amount reimbursed by the applicant to the employee later on would not amount to consideration for the supplies received by it because the service of employee to its employer, in the course of employment, is neither a supply of goods nor supply of services and, hence, the same is not liable to GST. The Authority for Advance Rulings held that the amount paid to employees by the applicant as reimbursement of expenses incurred by them in the course of employment are not liable to GST.
[Alcon Consulting Engineers (India) (P.) Ltd., In re [2019] 110 taxmann.com 357 (AAR - Karnataka)]
The applicant is providing consultancy services for construction projects. While providing such services some of the expenses are incurred by their employees on behalf of the applicant. It has
sought an Advance Ruling to determine whether expenses incurred by staff on behalf of applicant and then reimbursed periodically are liable to GST?
The Authority for Advance Rulings observed that the amount paid by employees to the supplier of service is a 'consideration' as if it is paid by the applicant itself for services received by it. This amount reimbursed by the applicant to the employee later on would not amount to consideration for the supplies received by it because the service of employee to its employer, in the course of employment, is neither a supply of goods nor supply of services and, hence, the same is not liable to GST. The Authority for Advance Rulings held that the amount paid to employees by the applicant as reimbursement of expenses incurred by them in the course of employment are not liable to GST.
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